Shawbrook Bank Limited · DRN-6254832

The complaint Mr and Mrs W’s complaint is, in essence, that Shawbrook Bank Limited (the ‘Lender’) acted unfairly and unreasonably by (1) being party to an unfair credit relationship with them under Section 140A of the Consumer Credit Act 1974 (as amended) (the ‘CCA’) and (2) deciding against paying claims under Section 75 of the CCA. What happened Mr and Mrs W purchased membership of a timeshare (the ‘Fractional Club’) from a timeshare provider (the ‘Supplier’) on 8 September 2014 (the ‘Time of Sale’). They entered into an agreement with the Supplier to buy 4,000 fractional points at a cost of £6,230 (the ‘Purchase Agreement’). Fractional Club membership was asset backed – which meant it gave Mr and Mrs W more than just holiday rights. It also included a share in the net sale proceeds of a property named on the Purchase Agreement (the ‘Allocated Property’) after their membership term ends. Mr and Mrs W paid for their Fractional Club membership by taking finance of £15,790.39 from the Lender (the ‘Credit Agreement’) in both of their names, which also consolidated the outstanding balance of an existing loan. The loan was paid off in full in November 2024. Mr and Mrs W– using a professional representative (the ‘PR’) – wrote to the Lender on 24 October 2022 (the ‘Letter of Complaint’) to raise a number of different concerns. As those concerns haven’t changed since they were first raised, and as both sides are familiar with them, it isn’t necessary to repeat them in detail here beyond the summary above. The Lender dealt with Mr and Mrs W’s concerns as a complaint and issued its final response letter on 5 February 2024, rejecting it on every ground. The complaint was then referred to the Financial Ombudsman Service. It was assessed by an Investigator who, having considered the information on file, rejected the complaint on its merits. Mr and Mrs W disagreed with the Investigator’s assessment and asked for an Ombudsman’s decision – which is why it was passed to me. I considered the matter and issued a provisional decision (the ‘PD’). In that decision, I said: “Section 75 of the CCA: the Supplier’s misrepresentations at the Time of Sale Section 75 of the CCA protects consumers who buy goods and services on credit. It says, in certain circumstances, that the finance provider is legally answerable for misrepresentation or breach of contract by the supplier. As a general rule, creditors can reasonably reject Section 75 claims that they are first informed about after the claim has become time-barred under the Limitation Act 1980 (the ‘LA’) as it wouldn’t be fair to expect creditors to look into such claims so long after the liability arose and after a limitation defence would be available

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in court. So, it is relevant for me to consider whether Mr and Mrs W’s Section 75 claim for misrepresentation was time-barred under the LA before they put it to the Lender. I wouldn’t normally think it would be unfair for a respondent firm to rely on the LA to decline a claim that’s been made outside the limitation period, and I don’t think it’s unfair in this instance. The date on which the cause of action accrued is, in this case, the date of sale. It was then that Mr and Mrs W entered into an agreement based, they say, on the Supplier’s misrepresentations. As the loan from the Lender was used to finance the purchase, it was also then that they suffered a loss. It follows that Mr and Mrs W had six years from the date of sale to make a claim for misrepresentation. But they didn’t make their claim to the Lender until 24 October 2022, which is outside the time limits set by the LA. The PR says section 32 of the LA gives Mr and Mrs W more time to make their claim. I disagree. Section 32 of the LA has the potential to postpone the relevant limitation period in cases of fraud, concealment, or mistake. I have thought about that here. But in this case the PR has simply referenced section 32 of the LA, but it hasn’t explained what issues concerning the legality of the timeshare arrangement with the Supplier which it says were concealed or fraudulently misrepresented, that would make it a relevant consideration that might extend time. So, I find it very difficult to see taking into account the brief submissions provided by the PR in this case, how section 32 could extend the time limit for Mr and Mrs W. I’m aware for example it’s been argued the membership was misrepresented because Mr and Mrs W say they couldn’t holiday in the way the Supplier told them they would be able to. But that would have been clear to them soon after the Time of Sale. So, even if it could be said that section 32 is likely to have postponed the limitation period until they first discovered that the availability and quality of holidays was not what they thought it would be (and I make no such finding that it would), I’m not persuaded that would make a difference here. However, the judgment in Scotland & Reast1 explains that, even if a limitation period has expired for a standalone misrepresentation claim, relevant misrepresentations that could be attributed to the Lender can be considered as part of the assessment of the unfairness of the credit relationship. So, I have gone on to consider those matters later in this decision. Section 75 of the CCA: the Supplier’s breach of contract The LA also applies to claims for breach of contract, with the relevant limitation period normally expiring six years after the date of the breach or breaches in question. Mr and Mrs W have complained, in essence, that the Supplier was in breach of the Purchase Agreement by being unable to provide them with their choice of holiday accommodation when they wanted it. Bearing in mind the relevant limitation period, any breach occurring in the six years leading up to the date they notified the Lender of their claim would not be time- barred (i.e. 24 October 2016 to 24 October 2022). Mr and Mrs W’s membership appears to have been active up until at least 2017, as from the information available, they had taken at least some holidays up to that point. Mr and Mrs W’s concerns about not getting the accommodation they wanted, insofar as these are potentially claims that the Supplier breached the Purchase Agreement from 24 October 2016 onwards, can be considered to have been made “in time” as far as the LA is concerned, and Mr and Mrs W could therefore have relied on Section 75 to claim against the Lender in respect of these. 1 See Scotland & Reast v. British Credit Trust Limited [2014] EWCA Civ 790

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However, very little information has been provided about exactly when the alleged breaches occurred or what specifically happened when they tried to make certain bookings. This makes it difficult to arrive at any conclusion that the Supplier must have been in breach of contract. It also appears that, as with any holiday accommodation, availability at resorts in the Supplier’s portfolio was not unlimited and will have been affected by higher demand at different times of year, like school holidays, for instance. Some of the sales paperwork provided Mr and Mrs W states that the availability of holidays was subject to demand. I accept that they may not have been able to take certain holidays. But I have not seen enough to persuade me that the Supplier had breached the terms of the Purchase Agreement. Overall, therefore, from the evidence I have seen to date, I do not think the Lender is liable to pay Mr and Mrs W any compensation for a breach of contract by the Supplier. And with that being the case, I do not think the Lender acted unfairly or unreasonably when it dealt with the Section 75 claim in question. Section 140A of the CCA: did the Lender participate in an unfair credit relationship? I’ve already explained why I’m not persuaded that the Lender acted unfairly or unreasonably in relation to Mr and Mrs D’s Section 75 claims. But there are other aspects of the sales process that, being the subject of dissatisfaction, I must explore with Section 140A in mind if I’m to consider this complaint in full – which is what I’ve done next. However, having considered the entirety of the credit relationship between Mr and Mrs W and the Lender along with all of the circumstances of the complaint, I don’t think the credit relationship between them was likely to have been rendered unfair for the purposes of Section 140A. When coming to that conclusion, and in carrying out my analysis, I have looked at: 1. The standard of the Supplier’s commercial conduct – which includes its sales and marketing practices at the Time of Sale along with any relevant training material; 2. The provision of information by the Supplier at the Time of Sale, including the contractual documentation and disclaimers made by the Supplier; 3. The commission arrangements between the Lender and the Supplier at the Time of Sale and the disclosure of those arrangements; 4. Evidence provided by both parties on what was likely to have been said and/or done at the Time of Sale; 5. The inherent probabilities of the sale given its circumstances; and, when relevant 6. Any existing unfairness from a related credit agreement. I have then considered the impact of these on the fairness of the credit relationship between Mr and Mrs W and the Lender. The Supplier’s sales & marketing practices at the Time of Sale Mr and Mrs W’s complaint about the Lender being party to an unfair credit relationship was and is made for several reasons. The PR suggests for instance that the right checks weren’t carried out before the Lender lent to Mr and Mrs W. I haven’t seen anything to persuade me that was the case in this complaint given its circumstances. But even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I make no such finding), I would have to be satisfied

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that the money lent to Mr and Mrs W was actually unaffordable before also concluding that they lost out as a result and then consider whether the credit relationship with the Lender was unfair to them for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr and Mrs W. Connected to this is the suggestion by the PR that the Credit Agreement wasn’t arranged in accordance with regulatory requirements. It isn’t clear which requirements or rules the PR thinks weren’t complied with here. However, it looks to me like Mr and Mrs W knew, amongst other things, how much they were borrowing and repaying each month, who they were borrowing from and that they were borrowing money to pay for Fractional Club membership. And as the lending doesn’t look like it was unaffordable for them, even if the Credit Agreement wasn’t arranged properly (which I make no formal finding on), I can’t see why that led to Mr and Mrs W’s financial loss – such that I can say that the credit relationship in question was unfair on them as a result. And with that being the case, I’m not persuaded that it would be fair or reasonable to tell the Lender to compensate them, even if the loan wasn’t arranged properly. One of these was the allegation that Mr and Mrs W were put under undue pressure to make the purchase at the Time of Sale. I acknowledge that Mr and Mrs W may have felt weary after a sales process that went on for a long time. But they say little about what was said and/or done by the Supplier during their sales presentation that made them feel as if they had no choice but to purchase Fractional Club membership when they simply did not want to. And with that being the case, there is insufficient evidence to demonstrate that Mr and Mrs W made the decision to purchase Fractional Club membership because their ability to exercise that choice was significantly impaired by pressure from the Supplier. As I’ve already said above, Mr and Mrs w have also alleged there were misrepresentations at the Time of Sale. Namely, that they were made promises by the Supplier about availability of holidays, which turned out not to be true. But while it’s possible that Fractional Club membership was misrepresented at the Time of Sale for the reasons they’ve mentioned, I don’t think it’s probable. They’re given little to none of the colour or context necessary to demonstrate that the Supplier made false statements of existing fact and/or opinion. And as there isn’t any other evidence on file to support the suggestion that Fractional Club membership was misrepresented for these reasons, I don’t think it was. Overall, therefore, I don’t think that Mr and Mrs W’s credit relationship with the Lender was rendered unfair to them under Section 140A for any of the reasons above. But there is another reason, perhaps the main reason, why the PR says the credit relationship with the Lender was unfair to them. And that’s the suggestion that Fractional Club membership was marketed and sold to them as an investment in breach of prohibition against selling timeshares in that way. The Supplier’s alleged breach of Regulation 14(3) of the Timeshare Regulations The Lender does not dispute, and I am satisfied, that Mr and Mrs W’s Fractional Club membership met the definition of a “timeshare contract” and was a “regulated contract” for the purposes of the Timeshare Regulations. Regulation 14(3) of the Timeshare Regulations prohibited the Supplier from marketing or selling Fractional Club membership as an investment. This is what the provision said at the Time of Sale: “A trader must not market or sell a proposed timeshare contract or long-term holiday product contract as an investment if the proposed contract would be a regulated contract.”

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But the PR says that the Supplier did exactly that at the Time of Sale. The term “investment” is not defined in the Timeshare Regulations. But for the purposes of this provisional decision, and by reference to the decided authorities, an investment is a transaction in which money or other property is laid out in the expectation or hope of financial gain or profit. A share in the Allocated Property clearly constituted an investment as it offered Mr and Mrs W the prospect of a financial return – whether or not, like all investments, that was more than what they first put into it. But it is important to note at this stage that the fact that Fractional Club membership included an investment element did not, itself, transgress the prohibition in Regulation 14(3). That provision prohibits the marketing and selling of a timeshare contract as an investment. It doesn’t prohibit the mere existence of an investment element in a timeshare contract or prohibit the marketing and selling of such a timeshare contract per se. In other words, the Timeshare Regulations did not ban products such as the Fractional Club. They just regulated how such products were marketed and sold. To conclude, therefore, that Fractional Club membership was marketed or sold to Mr and Mrs W as an investment in breach of Regulation 14(3), I have to be persuaded that it was more likely than not that the Supplier marketed and/or sold membership to them as an investment, i.e. told them or led them to believe that Fractional Club membership offered them the prospect of a financial gain (i.e., a profit) given the facts and circumstances of this complaint. There is competing evidence in this complaint as to whether Fractional Club membership was marketed and/or sold by the Supplier at the Time of Sale as an investment in breach of Regulation 14(3) of the Timeshare Regulations. On the one hand, it is clear that the Supplier made efforts to avoid specifically describing membership of the Fractional Club as an ‘investment’ or quantifying to prospective purchasers, such as Mr and Mrs W, the financial value of their share in the net sales proceeds of the Allocated Property along with the investment considerations, risks and rewards attached to them. On the other hand, I acknowledge that the Supplier’s sales process left open the possibility that the sales representative may have positioned Fractional Club membership as an investment. So, I accept that it’s equally possible that Fractional Club membership was marketed and sold to Mr and Mrs W as an investment in breach of Regulation 14(3). However, whether or not there was a breach of the relevant prohibition by the Supplier is not ultimately determinative of the outcome in this complaint for reasons I will come on to shortly. And with that being the case, it’s not necessary to make a formal finding on that particular issue for the purposes of this decision. Was the credit relationship between the Lender and the Consumer rendered unfair? Having found that it was possible that the Supplier breached Regulation 14(3) of the Timeshare Regulations at the Time of Sale, I now need to consider what impact that breach (if there was one) would’ve had on the fairness of the credit relationship between Mr and Mrs W and the Lender under the Credit Agreement and related Purchase Agreement, as the case law on Section 140A makes it clear that regulatory breaches do not automatically create unfairness for the purposes of that provision. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way.

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Indeed, it seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs W and the Lender that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them to enter into the Purchase Agreement and the Credit Agreement is an important consideration. The PR has provided a witness statement from Mr and Mrs W which is signed but not dated. The PR has said it was drafted in 2022 but hasn’t provided any evidence of this. In the statement, Mr and Mrs W have described their various purchases with the Supplier. In the paragraph which appears to relate to this Time of Sale, they’ve said: “Once again whilst on holiday at the [Supplier] resort in Spain at Xmas time 2014 we were summons [sic] to a meeting to discuss more exciting developments within the [Supplier]. The Fractional Ownership Scheme. Where we were told that we could earn an income by letting out the 2 weeks bought in Tenerife on an annual basis, which could be set against out [sic] maintenance fees. With the promise that [the Supplier] would buy back within 15 years. After more frantic hard sale, graphic charts etc. with sales and financial reps popping in and out we were coerced into buying into the scheme.” The testimony provided is brief and gives little by way of colour and context to the allegation made such as what exactly they were told, by whom and in what circumstances. Mr and Mrs W have also said the sale took place at Christmas time and have gone on to make various comments in this regard such as that the sale had to be rushed through and the sales office being closed soon after purchase because it took place at that specific time of year. But, they made this purchase in September, and I find this inconsistency difficult to understand such that I don’t feel able to place weight on what Mr and Mrs W have had to say here. I accept that Mr and Mrs W’s testimony indicates that they believe Fractional Club membership was marketed and sold to them as an investment. That, however, doesn’t necessarily speak to their motivations in making the purchase. Their testimony doesn’t particularly give any insight into that. Further, I note that Mr and Mrs W have said that it was after a subsequent purchase they made in 2017 that they decided to ‘try to get out of the scheme’. And, that they tried to sell their points in 2020. I also find this difficult to explain if they bought the membership because of the prospect of a financial gain, as a result of what they say they were told by the Supplier at the Time of Sale. So overall, on my reading of the evidence before me, the prospect of a financial gain from Fractional Club membership was not an important and motivating factor when Mr and Mrs W decided to go ahead with their purchase. That doesn’t mean they weren’t interested in a share in the Allocated Property. After all, that wouldn’t be surprising given the nature of the product at the centre of this complaint. But as Mr and Mrs W themselves don’t persuade me that their purchase was motivated by their share in the Allocated Property and the possibility of a profit, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision they ultimately made. On balance, therefore, even if the Supplier had marketed or sold the Fractional Club membership as an investment in breach of Regulation 14(3) of the Timeshare Regulations, I am not persuaded that Mr and Mrs W’s decision to purchase Fractional Club membership at the Time of Sale was motivated by the prospect of a financial gain (i.e., a profit). And for that reason, I do not think the credit relationship between Mr and Mrs W and the Lender was unfair to them even if the Supplier had breached Regulation 14(3).

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The provision of information by the Supplier at the Time of Sale The PR says that Mr and Mrs W were not given sufficient information at the Time of Sale by the Supplier in order to make an informed choice. It isn’t clear what information the PR thinks the Supplier failed to provide at the Time of Sale. But as has already been set out, the case law on Section 140A makes it clear that it does not automatically follow that regulatory breaches create unfairness for the purposes of the unfair relationship provisions. The extent to which such mistakes render a credit relationship unfair must also be determined according to their impact on the complainant. I have here considered, amongst other things, the Timeshare Regulations and Resort Development Organisation’s Code of Conduct dated 1 January 2010 (the ‘RDO Code’). The RDO Code sets out, amongst other things, the Sales and Marketing Principles. It states that selling Members will ensure: 2.2.1 Appropriate marketing techniques that make it clear what the object of the approach to the consumer is; 2.2.2 Appropriate selling methods that treat the consumer with respect and allow the consumer choice between purchasing and reflection; and 2.2.3 The provision of any necessary assistance to consumers to enable them to make an informed decision. I have considered what has been said in the Letter of Complaint, but I’ve not seen sufficient evidence which leads me to think, on the balance of probability, that any of the above principles were breached. And while I acknowledge that it is possible that the Supplier did not give Mr and Mrs W sufficient information, in good time, in order to satisfy the requirements of Regulation 12 of the Timeshare Regulations (which was concerned with the provision of ‘key information’), even if that was the case, I am not persuaded that they were deprived of information that would have led them to make a different purchasing decision at the Time of Sale, nor that they made the purchase because of the Supplier’s failings. So, with that being the case, even if there were information failings (which I make no formal finding on), I can’t see why they led to a financial loss in this case. Section 140A: Conclusion Given all of the factors I’ve looked at in this part of my decision, and having taken all of them into account, I’m not persuaded that the credit relationship between Mr and Mrs W and the Lender under the Credit Agreement and related Purchase Agreement was unfair to them. And as things currently stand, I don’t think it would be fair or reasonable that I uphold this complaint on that basis.” In conclusion, given the facts and circumstances of this complaint, I did not think that the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs W’s Section 75 claims. I was also not persuaded that the Lender was party to a credit relationship with Mr and Mrs W under the Credit Agreement that was unfair to them for the purposes of Section 140A of the CCA – nor could I see any other reason why it would be fair or reasonable to direct the Lender to compensate them. The Lender responded to the PD and accepted it. The PR also responded. It did not accept the PD and provided some further comments it wanted me to take into account.

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Having received the relevant responses from both parties, I’m now finalising my decision. The legal and regulatory context In considering what is fair and reasonable in all the circumstances of the complaint, I am required under DISP 3.6.4R to take into account: relevant (i) law and regulations; (ii) regulators’ rules, guidance and standards; and (iii) codes of practice; and (where appropriate), what I consider to have been good industry practice at the relevant time. The legal and regulatory context that I think is relevant to this complaint is, in many ways. no different to that shared in several hundred published ombudsman decisions on very similar complaints – which can be found on the Financial Ombudsman Service’s website. And with that being the case, it is not necessary to set out that context in detail here. But I would add that the following regulatory rules/guidance are also relevant: The Consumer Credit Sourcebook (‘CONC’) – Found in the Financial Conduct Authority’s (the ‘FCA’) Handbook of Rules and Guidance Below are the most relevant provisions and/or guidance as they were at the relevant time: • CONC 3.7.3 [R] • CONC 4.5.3 [R] • CONC 4.5.2 [G] The FCA’s Principles The rules on consumer credit sit alongside the wider obligations of firms, such as the Principles for Businesses (‘PRIN’). Set out below are those that are most relevant to this complaint: • Principle 6 • Principle 7 • Principle 8 What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Following the responses from both parties, I’ve considered the case afresh and having done so, I’ve reached the same decision as that which I outlined in my provisional findings, for broadly the same reasons. Again, my role as an Ombudsman isn’t to address every single point which has been made to date, but to decide what is fair and reasonable in the circumstances of this complaint. If I haven’t commented on, or referred to, something that either party has said, this doesn’t mean I haven’t considered it. Rather, I’ve focused here on addressing what I consider to be the key issues in deciding this complaint and explaining the reasons for reaching my final decision.

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The PR’s further comments in response to the PD in the main relate to the issue of whether the credit relationship between Mr and Mrs W and the Lender was unfair. In particular, the PR has provided further comments in relation to whether the membership was sold to Mr and Mrs W as an investment at the Time of Sale and in relation to the affordability of the loan. It has also provided further comments in relation to Mr and Mrs W’s Section 75 claims. As outlined in my PD, the PR originally raised various other points of complaint, all of which I addressed at that time. But it didn’t make any further comments in relation to those in their response to my PD. Indeed, it hasn’t said it disagrees with any of my provisional conclusions in relation to those other points. And since I haven’t been provided with anything more in relation to those other points by either party, I see no reason to change my conclusions in relation to them as set out in my PD. So, I’ll focus here on the points the PR has raised in response. Section 75 of the CCA In their response to my PD, the PR has continued to argue that Section 32 of the LA gives Mr and Mrs W more time to make their claim for misrepresentations. I’m not persuaded from the brief reiteration of their argument provided in response to my PD that this is the case. But in any event, as I already explained the judgment in Scotland & Reast2 explains that, even if a limitation period has expired for a standalone misrepresentation claim, relevant misrepresentations that could be attributed to the Lender can be considered as part of the assessment of the unfairness of the credit relationship. So, I went on to consider those matters in my provisional decision anyway as part of Mr and Mrs W’s Section 140A complaint. And on that matter, while I acknowledged it’s possible that Fractional Club membership was misrepresented at the Time of Sale for the reasons the PR has mentioned, I didn’t think it was probable. They’re given little to none of the colour or context necessary to demonstrate that the Supplier made false statements of existing fact and/or opinion. And I explained that as there isn’t any other evidence on file to support the suggestion that Fractional Club membership was misrepresented for these reasons, I didn’t think it was. The PR hasn’t provided any further evidence or substantive comment on this, so I don’t see any reason to reach a different conclusion on this point, or that this is a reason to now uphold the complaint. In relation to Mr and Mrs W’s claim for a breach of contract, the PR has said that it’s not reasonable to expect them to be able to provide detailed booking evidence. But, I don’t think it’s unreasonable when making such a claim to expect them to be able to provide some comment as to when the alleged breaches occurred or what they recall happening when they tried to make certain bookings. And in any event, as I already said, while I accept that Mr and Mrs W may not have been able to take certain holidays, it also appears that, as with any holiday accommodation, availability at resorts in the Supplier’s portfolio was not unlimited and will have been affected by higher demand at different times of year, like school holidays, for instance. Some of the sales paperwork provided to Mr and Mrs W states that the availability of holidays was subject to demand (which the PR has acknowledged in their response). So, I still haven’t seen enough to persuade me that the Supplier breached the terms of the Purchase Agreement. 2 See Scotland & Reast v. British Credit Trust Limited [2014] EWCA Civ 790

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Section 140A of the CCA: did the Lender participate in an unfair credit relationship? The Supplier’s alleged breach of Regulation 14(3) of the Timeshare regulations In its response to my PD, the PR has reasserted its view that the Supplier marketed the Fractional Club membership to Mr and Mrs W as an investment and that this was a motivating factor in their decision. I acknowledged in my PD that it was possible that Fractional Club membership was marketed and sold to Mr and Mrs W as an investment in breach of Regulation 14(3). A view I still hold. But I also thought and still think that it isn’t necessary to make a formal finding on that particular issue for the purposes of my determination on this complaint because a breach of Regulation 14(3) by the Supplier is not itself determinative of the outcome in this complaint unless the impact of such a breach suggested otherwise. The PR disagrees with that and suggests that the selling of a timeshare as an investment (i.e. in a breach of Regulation 14(3) of the Timeshare Regulations) is, itself, sufficient to create an unfair credit relationship. But I don’t agree. In Shawbrook & BPF v FOS3, Mrs Justice Collins Rice didn’t find that a breach of Regulation14(3) of the Timeshare Regulations was "causative of the legal relations entered into". She recognised that such a breach was "conduct that knocks away the central consumer protection safeguard", but she went on to say that it was the ombudsmen behind the two reviewed decisions who found that such a breach was, given the facts and circumstances of the relevant complaints, causative of the consumers in question purchasing their timeshares and taking out loans to do so. What’s more, the Supreme Court’s judgment in Plevin makes it clear that regulatory breaches do not automatically create unfairness for the purposes of Section 140A. Such breaches and their consequences (if there are any) must be considered in the round, rather than in a narrow or technical way. I am also mindful of what HHJ Waksman QC (as he then was) and HHJ Worster had to say in Carney v NM Rothschild & Sons Ltd [2018] EWHC 958 (‘Carney’) and Kerrigan v Elevate Credit International Ltd [2020] EWHC 2169 (Comm) (‘Kerrigan’) (respectively) on causation. In Carney, HHJ Waksman QC said the following in paragraph 51: “[…] In cases of wrong advice and misrepresentation, it would be odd if any relief could be considered if they did not have at least some material impact on the debtor when deciding whether or not to enter the agreement. […] in a case like the one before me, if in fact the debtors would have entered into the agreement in any event, this must surely count against a finding of unfair relationship under s140A. […]” And in Kerrigan, HHJ Worster said this in paragraphs 213 and 214: “[…] The terms of section 140A(1) CCA do not impose a requirement of “causation” in the sense that the debtor must show that a breach caused a loss for an award of substantial damages to be made. The focus is on the unfairness of the relationship, and the court's approach to the granting of relief is informed by that, rather than by a demonstration that a 3 R (on the application of Shawbrook Bank Ltd) v Financial Ombudsman Service Ltd and R (on the application of Clydesdale Financial Services Ltd (t/a Barclays Partner Finance)) v Financial Ombudsman Service [2023] EWHC 1069 (Admin) (‘Shawbrook & BPF v FOS’).

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particular act caused a particular loss. Section 140A(1) provides only that the court may make an order if it determines that the relationship is unfair to the debtor. […] […] There is a link between (i) the failings of the creditor which lead to the unfairness in the relationship, (ii) the unfairness itself, and (iii) the relief. It is not to be analysed in the sort of linear terms which arise when considering causation proper. The court is to have regard to all the relevant circumstances when determining whether the relationship is unfair, and the same sort of approach applies when considering what relief is required to remedy that unfairness. […]” So, it still seems to me that, if I am to conclude that a breach of Regulation 14(3) led to a credit relationship between Mr and Mrs W and the Lender that was unfair to them and warranted relief as a result, whether the Supplier’s breach of Regulation 14(3) led them to enter into the Purchase Agreement and the Credit Agreement is an important consideration. Indeed, doing that accords with common sense, for if events would have unfolded in the same way whether or not such a pre-contractual breach had occurred, it would be difficult to attribute any particular importance to the breach when deciding whether an unfair debtor- creditor relationship ensued, or whether a remedy is appropriate. In my PD I explained the reasons why I didn’t think any breach of Regulation 14(3) had led Mr and Mrs W to proceed with their purchase. In short, I was not persuaded that their decision was motivated by the prospect of a financial gain (i.e., a profit). In reaching that view, I took into account the testimony given by Mr and Mrs W in the course of their complaint. I recognise the PR has interpreted Mr and Mrs W’s testimony differently to how I have, and I have carefully considered its further comments. Ultimately though, they have not led me to a different conclusion. The PR objects to the approach I’ve taken in assessing this aspect of the complaint, believing that I haven’t applied the relevant test of whether any such breach was material to their purchasing decision, by requiring Mr and Mrs W to have been “primarily or mainly motivated” by the investment element in order to uphold the complaint. But I did not make such a finding. I said that, in my view, I didn’t think their purchase was motivated by their share in the Allocated Property and the possibility of a profit. And so, I didn’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision they ultimately made. The PR has said they think the witness statement provided does show that the alleged breach of Regulation 14(3) did play a material factor in Mr and Mrs W’s purchasing decision. But for all of the reasons I’ve already said, I don’t agree – and the PR hasn’t provided any new evidence for me to consider here, they’ve simply repeated their argument. I noted in my PD that Mr and Mrs W have said in their testimony that the sale took place at Christmas time and that they made various comments in this regard such as that the sale had to be rushed through and the sales office being closed soon after purchase because it took place at that specific time of year. But, I highlighted that they made this purchase in September, and I said I find this inconsistency difficult to understand such that I didn’t feel able to place weight on what Mr and Mrs W have had to say here. The PR has disagreed with this saying, in summary, that this is only a slightly incorrect date, and such a minor inconsistency shouldn’t mean I’m not able to place weight on what a consumer has had to say. And, that I should have reasonable expectations about what a consumer is able to remember after such a long period of time having passed between a sale and the date of their recollections. And I agree with that in a general sense. But here, I don’t consider this to be a minor inconsistency, and I don’t agree with the assertion that this

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is only a ‘slightly incorrect date’. Mr and Mrs W have made highly specific comments in their recollections relating to the time of year the sale took place and what this meant for their experience of it. And I still find it odd that they would recall these details specifically when the sale did not take place at a time where these recollections would be at all plausible. So, as I said before, I causes me to question the reliability of their recollections such that I don’t feel able to place much, if any, weight on it. But in any event, as I also already said, I don’t consider that Mr and Mrs W’s statement particularly gives any insight into their reasons for purchasing. On this point, I also noted in my PD that Mr and Mrs W have said that it was after a subsequent purchase they made in 2017 that they decided to ‘try to get out of the scheme’. And, that they tried to sell their points in 2020. I still find this difficult to explain if they bought the membership because of the prospect of a financial gain, as a result of what they say they were told by the Supplier at the Time of Sale. And indeed, the PR hasn’t commented on this point any further in their response. So, for all of the above reasons, along with those I already gave in my PD, I don’t think a breach of Regulation 14(3) by the Supplier was likely to have been material to the decision Mr and Mrs W ultimately made. And for that reason, I do not think the credit relationship between Mr and Mrs W and the Lender was unfair to them even if the Supplier had breached Regulation 14(3). Other points The PR has continued to argue in response to my PD that the right checks weren’t carried out before the Lender lent to Mr and Mrs W. I still haven’t seen anything to persuade me that was the case in this complaint given its circumstances. But as I already explained, even if I were to find that the Lender failed to do everything it should have when it agreed to lend (and I still make no such finding), I would have to be satisfied that the money lent to Mr and Mrs W was actually unaffordable before also concluding that they lost out as a result and then consider whether the credit relationship with the Lender was unfair to them for this reason. But from the information provided, I am not satisfied that the lending was unaffordable for Mr and Mrs W. Beyond a simple reiteration of their argument, the PR hasn’t provided any further evidence on this point in response to my PD. So, it follows that I still don’t think this is a reason to uphold this complaint. Conclusion In conclusion, given the facts and circumstances of this complaint, I do not think that the Lender acted unfairly or unreasonably when it dealt with Mr and Mrs W’s Section 75 claims, and I am not persuaded that the Lender was party to a credit relationship with them under the Credit Agreement that was unfair to them for the purposes of Section 140A of the CCA. And having taken everything into account, I see no other reason why it would be fair or reasonable to direct the Lender to compensate them. My final decision For the reasons set out above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs W and Mr W to accept or reject my decision before 27 April 2026. Fiona Mallinson

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Ombudsman

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